Priced below market valuation and long time on market: Red flags?

markymarknz

Hi all,

We're first time buyers and yesterday put in an offer for a flat which had been on the market since April this year. The offer was accepted the same day.

The explanation for the time on market was that a previous buyer had to withdraw offer because of redundancy. We have now found previous advertising for the flat dating back to October 2018.

We have also now noticed the original (new build) price this was purchased for back in 2015 was about £27k more than the current asking price, with some websites valuing the flat at around £60-70k above the asking price. Our offer was about £4k below asking price.

Are these two factors red flags? We're considering withdrawing our offer but unsure if we should be worried or are just getting a bargain.

What is the best way to find out for sure?

getmore4less

Nothing of what you have said gives any clue to what the market price might be if that is what you are using then you needed to do a lot more research before putting an offer on the place.

What are the recent sell through and asking prices for anything SSTC that is remotely similar

Grow the sample set till getting comfortable with where this one sits in the pecking order.

Check out every flat in the block and look at the planning portal.

We had a block near us that had planning application for more flats, one of the complaints from a resident was why are they building more when they won't fix the current leaking roof.

AdrianC

markymarknz wrote: »

We have also now noticed the original (new build) price this was purchased for back in 2015 was about £27k more than the current asking price, with some websites valuing the flat at around £60-70k above the asking price.

Zoopla, by any chance?

All they do is multiply the original price by what they think the market in the area has done over the interim. It's a wet-finger-in-air at best, a wild guess at worst.

New build purchases always have a premium which falls off on resale - not only are there various incentives which may not be available to buyers of non-new-builds (HtB etc), but there's the "shiny-shiny" factor.

So, no, that doesn't say anything about "the market value". What does is what else is on the local market, and how it's priced relative to this particular place...

On the market since October, one sale fallen through - that's not actually that long. Let's look at a hypothetical timeline. It's not hard to assume the market was slow in November/December/January for the usual Xmas reasons. An offer went in in February, and slowly proceeded through March and April, before the buyer had to pull out at a late stage. It then had a rest while the vendors figured out what to do since that broke their own upward chain apart - before coming back on in May. It's now early July.

davidmcn

As above, I think the issue here is that you've got the "market valuation" wrong. What have similar "second hand" flats sold for?

markymarknz

getmore4less, AdrianC, davidmcn,

Thanks for your responses. Makes perfect sense now.

Similar flats in the area have indeed sold for relatively similar prices. Nothing in the area is at the 'Zoopla market valuation range'. We thought we had done due diligence but then these seemingly significant two factors surfaced which started conjuring up thoughts of potential issues with that flat and other 'what ifs'.

Many thanks for your responses.

jonnygee2

with some websites valuing the flat at around £60-70k above the asking price.

I live in a row of five structurally identical flats. The Zoopla estimates for these go from about 280K to about 420k.

Zoopla estimates are trash.

markymarknz

jonnygee2 wrote: »

I live in a row of five structurally identical flats. The Zoopla estimates for these go from about 280K to about 420k.

Zoopla estimates are trash.

Fair call on Zoopla. We were also surprised the asking price was also 6% below purchase price from new.

Needadvice2

I wouldn't worry about the new build price from 2015. When you buy brand new the property does depreciate quite quickly. The 1st buyer pays the premium for buying new.

If you're lucky to buy the property next you'll get it at a much cheaper cost, even if it's on the secondary market within a year.

Zoopla valuations tend to under value by about 40k in my city. I once thought I had been majorly ripped off, but it was across the board.

markin

For some areas the demand for 1/2 bed flats are low so the is always a chance it may go down more, especially if the are any new builds about when you want to sell up.

Crashy_Time

markin wrote: »

For some areas the demand for 1/2 bed flats are low so the is always a chance it may go down more, especially if the are any new builds about when you want to sell up.

Yep, New Build is the biggest red flag, they have been throwing them up all over the place, I don`t think they planned on a tricky Brexit though.....